The government of Vietnam’s central province of Quang Ngai has said it will withdraw the investment license of a long-delayed steel mill project invested by Guang Lian Steel Company, a Taiwanese joint venture, by the end of this month after a conducting an inspection.
The decision is made after many delays and hundreds of hectares of land have been wastefully reserved for the project, local media reported.
A license of the Guang Lian Dung Quat steel project was granted in 2006 with an initial capital of $556 million to Taiwan-based Tycoons, which partnered with another Taiwanese firm E-United in 2008 to scale up the investment to $4.5 billion and the annual capacity to seven million tons.
In April 2012, the two companies invited Japan’s JFE Group to join in. However, the Japanese group in September 2014 declined the proposal after conducting a feasibility study.
The project has come to a standstill since mid-2014 and Guang Lian Steel Company in July 2015 informed to the provincial government that it could not arrange more finance to proceed with the project.
A corner of the Guang Lian steel project in Quang Ngai province. (Photo: enternews.vn)
As of September 2014, as much as $42 million had been disbursed for the project, of which the province spent 175 billion dong (roughly $8 million) on site clearance.
On the back of E-United Group’s exit, Hoa Phat Group (HPG), the second largest steel producer in Vietnam by market share, in late 2015 asked for the province’s permission to build a steel manufacturing plant that would be erected on the site that has been earmarked for the Guang Lian steel project in Dung Quat Economic Zone.
The plant would have an investment of between $2 billion and $2.5 billion, and a designed capacity of four million tons per year.
A number of steel producers in Vietnam are striving to stay afloat due to a surplus in domestic capacity and the massive import of cheap steel from neighboring China.